World Week Ahead: Earnings, data to dominate

World Week Ahead: Earnings, data to dominate

By
Margreet Dietz

July 21 (BusinessDesk) - Investors are set
to refocus on US corporate earnings in the days ahead with
Apple, Facebook, Microsoft as well as Boeing and Caterpillar
on deck as the pace of reporting accelerates.

In all some
140 companies in the Standard & Poor’s 500 Index are set
to report quarterly results this
week.

Better-than-expected results from Google and Intel
last week helped to offset uncertainty from geopolitical
concerns driven by the shooting down of the Malaysia
Airlines passenger jet over eastern Ukraine and Israel’s
invasion into Gaza.

“Earnings continue to surprise on
the upside, which does give an impetus for stocks to go
higher,” Peter Jankovskis, co-chief investment officer at
OakBrook Investments in Lisle, Illinois, told Bloomberg
News. “Certainly the geopolitical concern has been a major
drag, or at least a worry. Volatility is coming back so
we’re going to have a bumpy ride.

On Friday, shares of
Google climbed 4 percent after the company posted sales that
surpassed expectations.

Also helping to lift sentiment is
continuing merger and acquisition activity. Twenty First
Century Fox is courting Time Warner in a deal expected to be
worth about US$80 billion. Last week US drugmaker AbbVie
persuaded UK’s Shire to accept a US$55 billion takeover
offer.

The world’s largest economy also continues to
recover, underpinning rising valuations. On Friday, a report
showed that the index of US leading indicators gained for
the fifth straight month in June, bolstering an optimistic
outlook.

"We have an economy that is expanding," Peter
Kenny, chief market strategist at Clearpool Group in New
York, told Reuters. "We have many data points that support
that narrative.”

This week offers several reports on the
US real estate market, which has been considered a weak
point in the nation’s recovery, with the FHFA house price
index and existing home sales due Tuesday and new home sales
due Thursday.

“The housing sector, however, has shown
little recent progress,” Federal Reserve Chair Janet
Yellen told US Congress in her semiannual monetary policy
update last week. “While this sector has recovered notably
from its earlier trough, housing activity leveled off in the
wake of last year's increase in mortgage rates, and readings
this year have, overall, continued to be
disappointing.”

Bill Gross, head of the world’s
largest bond fund at Pimco, said the Fed’s continuing bias
for easy money is likely to keep the yield on the US 10-year
Treasury trading in a narrow 2.5 percent to 3 percent range
for some time yet.

"When the Fed begins its upward journey
– June 2015 – then it must be cautious and probably
needs to stop at 2 percent sometime in 2017 because we have
a highly levered economy, structural demographic headwinds
which lower real growth and the effect of technology and job
displacement," Gross told Reuters.

Other economic data
scheduled for release in the coming days include the Chicago
Fed national activity index, due today; the consumer price
index and Richmond Fed manufacturing index, due Tuesday;
weekly jobless claims, the PMI manufacturing index flash,
and Kansas City Fed manufacturing index, due Thursday; and
durable goods orders, due Friday.

The International
Monetary Fund will provide its latest World Economic Outlook
on Thursday.

The Wellington-based BusinessDesk team led by former Bloomberg Asian top editor Jonathan Underhill and Qantas Award-winning journalist and commentator Pattrick Smellie provides a daily news feed for a serious business audience.

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